Did you know that 39% of invoices are not paid by their due date? Not only that, but 48% of clients delay their payments, and a further 52% of businesses are asked by their clients for extended terms. Invoice collection is a crucial part of your business, where keeping your cash flowing is important so that your business will thrive.
Invoices that simply reflect the amount owing don’t take into account the business relationship, but there are steps you can take to complement your invoicing and maintain a professional method of receiving payments. Advice abounds on how to apply due diligence and procedures which make sure your invoices are paid promptly and reliably, but it is also helpful to see what kinds of mistakes you may be making which prevent your business from the benefit of continuous funds. Here are the worst mistakes we have heard about invoice collection.
Not invoicing immediately. We all know the perils of procrastination. Delaying or postponing important tasks costs you time and money. This applies particularly to business, where you rely on timely payments to keep yourself afloat. Don’t hesitate: send your invoices immediately after work is completed to avoid interruptions in accounts receivable so that you can worry about the other details of running your company.
Failure to specify payment due dates. It is important to be explicitly clear in each invoice that names, addresses and contact information for both your company and your client are correct, and that there are clear descriptions of the services for which they are being charged. Equally important are dates of completion and of expected payment(s).
Errors with customer names or addresses. Be absolutely diligent about correct spelling and contact information for all of your clients, and be sure to have updated contact information for everyone you invoice. This small, but important step can prevent delays and disputes over invoice collection. Current client records are a necessity in your invoicing procedures. Don’t forget to proofread each and every invoice before it is sent out. Skipping this step will make mistakes much more likely.
Not displaying payment/credit terms clearly. As with the importance of getting your clients’ names and addresses correct, properly advertising how and when your customers can pay their outstanding balance is so important for your accounts receivable. Neglecting this step can lead to complicated financial and relationship issues in the future. Be sure to clearly lay out which methods of payment are accepted, as well as how and when consumers can settle outstanding debt.
Not offering easy, online payment options. Electronic payments are instant, secure, and accepted any time of the day. Ease of use for both business owner and client is one of the benefits of our auto-collect feature. Here you can adjust your settings manually. Once it is active, emails will be automatically sent out based on your customized input.
Not following up. Don’t assume your client has received their invoice and is going to pay by the due date laid out for them in the contract. Follow up with courtesy calls or with auto-collect emails to ensure that everybody is on the same page regarding payments and collection dates. Remember the importance of relationships with your customers. Chasing payment doesn’t need to be aggressive or discourteous.
Not including incentives. Clients love incentives, and it is a proven method for early and prompt payments. Consider a reduction in the overall invoice cost for early remittance, and satisfied customers who want to keep doing business with you.
Now that you know the worst mistakes we have heard about invoice collection, you can work to avoid these pitfalls with your own business. Invoicing early and chasing payment will help to keep your cash flow running smoothly throughout the year. Don’t feel guilty about applying pressure on your late-paying customers. You can be polite and professional while maintaining important relationships.
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